Jumbo Home Mortgage Loans

Jumbo Home Mortgage Loans

Jumbo Home Mortgage Loans

If you want to purchase a high priced home then a jumbo mortgage or super jumbo loan is tailor made for your needs. They cater to the needs of those people who require loans that are larger than normal. They are convenient; however, their interest rates are slightly higher than those of other loans are. The amount of money that defines a jumbo mortgage loan changes every year.

Jumbo Loan Rates and Cap

Every year two of the biggest secondary market lenders Fannie Mae and Freddie Mac, determine at which figure or loan amount, the conventional mortgage ends and the jumbo mortgage loan will begin.

The designated interest rates for jumbo mortgage are higher than normal, as these two lenders are the ones that buy the bulk of all the residential mortgages from the lenders in the US. They then resell these mortgages to various professional investors. The interest rates are high because the market is smaller and it is not easy to sell jumbo home loans to investors. Conventional loans are much easier to sell than jumbo loans.

All these reasons taken together, lead to the charging of a higher interest rate on the mortgage. Otherwise, these loans will not be profitable enough to the lenders.

The Jumbo Loan Cap

The ceilings on conventional loans have been raised significantly. This is because housing prices have been growing rapidly and are therefore priced high. Currently, the jumbo home loan, kick starts from $417,000 and upwards. Special exceptions have also been made for places that have a higher cost of living and there are higher caps for such places.